Revenues reduced by €3.44 million to €1.24 million compared to €4.68 million in the prior year. The reduction in revenues is due to the transfer of development work associated with the agreements for the Insulin and GLP-1 compounds from Merrion to Novo Nordisk.

The net loss increased to €6.53 million compared to €2.51 million in prior year, mainly due to the reduction in revenues.

Loss per ordinary share was €0.38 (2010: €0.15).

Cash and cash equivalents at 31 December 2011 were €1.92 million (31 December 2010: €3.31 million).

Merrion continues to work with Novo Nordisk on its oral insulin product. Following favorable preclinical results for a new oral formulation, significant effort is being placed on the development of this GIPET® based program with expectations of a Phase I/II proof of concept study by the end of Q1 2013.

Novo Nordisk announced the successful completion of a single dose Phase I trial with a novel oral insulin using Merrion's GIPET technology in February 2012.

An impairment charge of €877,028 was recognised in order to reduce the carrying value of the Citywest facility to its estimated recoverable amount of €2.5 million, which represents the best estimate of its fair value.

On 3 February 2012, Merrion simultaneously announced the re-financing of Hercules Technology Growth Capital's ("HTGC") loan position by Irelandia Investments ("Irelandia") and the positive results demonstrated by Novo Nordisk A/S for the single dose Phase I trial of its oral insulin product based on Merrion's GIPET technology.

Together with the results of the Strategic Review and of the Strategic Partner Process, initiated in June and October 2011 respectively, these developments have led the Board of Merrion to a series of conclusions as follows:

Strategic partner Process: Expressions of interest from this process did not result in an offer consistent with the Board's long term view of the intrinsic value of Merrion. Therefore, the Board has decided not to continue the Strategic Partner Process and accordingly Merrion is no longer in any discussions which may lead to an offer for the Company.

Novo Nordisk Partnership: Currently the most valuable asset to Merrion is its partnership agreement with Novo Nordisk for oral insulin and oral GLP-1. The agreement, announced in January 2009, has had significant returns to date (cash receipts of $20 million). Both products are significant product opportunities with c. $107 million in potential future cash milestones and additional royalties. Novo Nordisk announced successful Phase I results for its oral insulin in its 2011 annual results on 2 February, 2012. This development significantly increases the value of the Novo Nordisk Partnership.

Proprietary Compound Development Program: Merrion achieved positive preclinical results for two new oral formulations of existing pharmaceuticals in the anti-infective and blood disorder areas. However, given funding constraints, advancing these programs will not be prioritised by Merrion.

Other sources of value: Interest exists for individual assets, including GIPET technology platform, OrazolTM, the Citywest facility and equipment.

The Board has taken the decision to implement a new strategic plan which is aimed at minimizing ongoing operational costs related to Merrion's own drug development activities and maximizing future cash flows. Merrion's operating model will realize value by leveraging the resources of external partners such as Novo Nordisk and others who have expressed an interest in Merrion's GIPET technology.

It is expected that the restructuring will result in further redundancies. Implementation of this restructuring plan will begin immediately and is expected to be completed by mid 2012. It is anticipated that Merrion's operating costs will be reduced from c. €275k to c. €100k per month on average, which will enable the Company to meet all its obligations, maintain and protect its intellectual property rights, maintain its ESM quotation and continue to seek partnering opportunities for the GIPET technology platform. Merrion will continue its discussions relating to the monetisation of the manufacturing equipment, the Citywest facility and Orazol and leverage all tax credit opportunities available.

In the event there is a timing difference between the incoming capital and ongoing funding requirements, the Company has signed an agreement with Irelandia that provides for an overdraft loan facility of up to €1,000,000. The loan facility is unsecured and carries an interest rate of 10% which is rolled up until repayment of principal. The loan is repayable on demand.

The Board is of the opinion that the strategic plan it has decided on is in the best interest of Merrion's shareholders. It will create a sustainable company through 2014 with the potential of significant future upside from its partnership with Novo Nordisk.

Company background

Merrion Pharmaceuticals plc (www.merrionpharma.com) is a publicly listed product development company focused on delivering innovation to the market by partnering with pharmaceutical companies to develop patented products. Established in 2003, Merrion is primarily engaged in the development of oral forms (tablets/capsules) of drugs that have suboptimal absorption, many of which can only be given by injection.

Merrion's patented drug delivery technologies increase bioavailability, by improving absorption in the gastrointestinal tract, of drugs that are otherwise poorly absorbed. This can provide substantial benefits in patient convenience and safety, and while also having the potential to enhance drug efficacy. Merrion utilises its technology to develop new oral drugs in two ways; it develops its own proprietary drugs using the GIPET technology and partners with other pharmaceutical companies in developing oral GIPET formulations of their products.

Merrion has agreements with several pharmaceutical companies. Currently there are two ongoing license agreements with Novo Nordisk to develop and commercialise oral forms of Novo Nordisk's Insulin and GLP-1 using Merrion's proprietary GIPET technology.

Merrion Pharmaceuticals is based in Dublin and is listed on the Irish Stock Exchange (ESM) under the symbol MERR.